ROE v. Paid: Banks Are Where the Money Is

These CEOs don't need to do much to collect an eight-figure check.
By Stephen Schurr ,

If you ever needed proof that it pays to go into finance, here it is.

Of the 80 financial-services companies in the

S&P 500

, 31 of them handed their chief executives eight-figure checks. The nice thing about being a financial-services CEO is, you don't always have to earn it: As today's

ROE v. Paid: Financial Services

chart shows, only 41 -- just over half -- of the financial-services outfits in the S&P 500 managed to post return on equity of 15% a year on average over the past five years. And so it goes: Pay doesn't always correlate with performance.

As part of

TheStreet.com's

coverage of executive pay, the ROE v. Paid charts compare a company's average return on equity -- or ROE, a handy measure of how effectively a CEO puts shareholder money to use -- over the past five years with the chief executive's compensation. For compensation, we used the most recent figures provided by Aon Consulting's eComp Database -- the numbers include salary, bonus and options.

Lots of media outlets have been measuring executive pay against the company's stock market returns over the past year. Since the S&P 500 cratered 23.4% in 2002, and took down lots of individual companies with it, we felt ROE would be a fairer -- if still imperfect -- measure of executive performance. (For more on our series, please read

this column.)

According to the chart, some high-profile finance chieftains haven't exactly been knocking the cover off the ball on ROE. While the verdict is still out on whether Jamie Dimon's three-year effort to turn around

Bank One

(ONE) - Get Report

will bear fruit, his $10.7 million compensation last year -- compared with a five-year average ROE of 11.9% -- shows he gets paid as if it were a done deal. (Dimon also has $21.2 million in unexercised stock options from previous years, according to eComp.)

To be fair, Dimon's payday is modest compared to peers. Consider

J.P. Morgan Chase

(JPM) - Get Report

, where William Harrison took home $21.9 million in pay, bonus and options in 2002, while the firm's five-year ROE is a less-than-stellar 11.9%. The stock, for what it's worth, skidded 34% last year.

For the stock-watchers out there, the ROE v. Paid chart also shows market returns for 2002: Only 22 of the 80 financial-services outfits ended in the black. As the chart indicates, that hasn't put CEOs out too much. And before you start taking up a collection for executives such as

Capital One's

(COF) - Get Report

Richard Fairbank, whose compensation totaled a mere $97,274 last year, consider: Fairbank has $103.9 million in unexercised options from previous years, according to eComp.

Check today's chart to see how the rest of the financial-services CEOs stack up.

Click here to see entire table.

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